Refund would cost Dumas ISD $4.8M

The Texas Commission of Environmental Quality is considering a tax refund appeal by several major oil refineries, including Valero, that would require school districts and local governments across Texas to give back more than $135 million in tax revenues.

If the commission rules in favor of Valero, Dumas Independent School District would have to cut Valero a check for $4.8 million, The Associated Press reported. Dumas ISD Assistant Superintendent for Business Greg Lewis said his school district generates about $4.5 million in property taxes yearly from the Valero McKee refinery near Dumas.

While he would rather not see that money returned, Lewis said Valero’s appeal has not affected how his school district has budgeted monies for this year.

“It’s just one of those things that’s out there,” Lewis said. “It was a little bit disconcerting to us that TCEQ made the decision that we thought was right for the first time and then when Valero appealed it there was at least some discussion from some of the commissioners that ‘Well, maybe we do need to look at this again.’”

Valero officials contend that the company is entitled to tax breaks on equipment because the equipment controls pollution levels and Texas voters amended the state constitution in 1993 to exempt equipment that reduces on-site pollution from taxation, AP reported.

The commission, appointed by Gov. Rick Perry, initially voted against the tax breaks when Valero first applied for the refund for six of its refineries in 2007, and at least four other companies have asked for the same tax break since that time, AP reported.

The commission initially ruled against Valero on grounds that the company’s efforts to remove sulfur dioxide from gasoline and diesel and upgrade equipment, which the Environmental Protection Agency began requiring in 2006, did not reduce on-site pollution, AP reported.

Lewis said he thought the initial ruling settled the matter.

“The law said to be exempt the piece of equipment has to reduce pollution at the site, not pollution off site, and that’s pretty clear, but Valero doesn’t interpret it that way,” Lewis said.

“They (Valero) think they should get the tax break just because they’re producing fuels that meet the EPA requirements for exhaust, essentially.”

The state may help mitigate some of that $4.8 million if the commission rules in favor of Valero, Lewis said, but he was not sure.

“If you look at most of the last four- or five-year period, state funding worked whereby the state would guarantee us an amount of money which was the combination of state and local funds. If you collected less taxes you got more state money.

“There is some thought on our part that if these refunds would happen the state would go back then and pick up at least a portion of that based on those old funding laws,” Lewis said.

“We just won’t know that kind of thing until this actually comes to pass and (we) see what the state does with it.”

Moore County, which includes Dumas, would have to pay $15.8 million if the commission overturns its previous decision, the AP reported.

Valero paid Moore County more than $7.2 million in property taxes in 2010, County Tax Assessor-Collector Nikki McDonald said.

Moore County Judge Rowdy Rhoades said his county is already facing a financial crunch, which would be further aggravated if Valero gets a tax break.

“We’re a population of about 21,000 and from last year our oil and gas revenues are down $80 million,” he said.

“Well that affects your tax base. Our residential and commercial (revenues) are up enough to get us to $47 million in the hole, and that’s how we have to adjust our budget.

“Most of these problems happen after your budget is already passed, so then you’re kind of locked in and you have to find a way of doing without things,” Rhoades said. “There’s a lot of concerns on that.”

There is no deadline for the commission to reach a decision on the appeal, and no decision is imminent at this time, a commission spokeswoman said Tuesday.

The opposing party can appeal whatever decision is made, she said.

Attempts to reach State Rep. Four Price, State Rep. Warren Chisum and State Sen. Kel Seliger for comment on the refineries’ refund requests were unsuccessful Tuesday.

Source: AP analysis of county tax rates, TCEQ application information

Costs of tax refunds to refineries

Below is a list of the entities affected by the 16 initial requests and the amounts they would have to pay back.